A homebuyer who held off purchasing a $500,000 home in July when rates sank to 3.41 percent now will pay $255 more a month on a 30-year loan.

By Kathy Orton December 22, 2016 at 5:58 PM

House hunters might need to start adjusting their expectations as the days of ultra-low mortgage rates could finally be winding down.

With homeownership hovering around a 50-year low, the American dream of owning a home seems like an unattainable goal to some, as prices are rising, supply is dwindling and mortgage rates have climbed to heights not seen in more than two years.

According to the latest data released Thursday by Freddie Mac, the 30-year, fixed-rate average jumped to 4.3 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.16 percent a week ago and 3.96 percent a year ago.

The 30-year fixed rate, the most popular mortgage product, hasn’t been this high since April 2014. It has risen 83 basis points since Oct. 27 and 14 basis points in the past week. (A basis point is 0.01 percentage point.)

A homebuyer who held off purchasing a $500,000 home in July when rates sank to 3.41 percent now will pay $255 more a month on a 30-year loan.

The spike in mortgage rates also hurts the refinance market, although many homeowners already had taken advantage of the prolonged period of low rates.

“The world is an uncertain place, and there is always a chance that rates could drop again in response to global turmoil,” said Mike Fratantoni, Mortgage Bankers Association’s chief economist. “But we expect that refinance volume will most likely be much lower over the next few years as homeowners have repeatedly had the opportunity to lower their rates, and there will be fewer households with an incentive to refinance if rates follow the path we are projecting.”

The bigger concern is how rising rates will affect affordability, particularly with rising prices. Home prices nationally reached a new high in September, according to the Standard & Poor’s/Case-Shiller index released last month. The average home price surpassed the previous best set during the housing boom. However, adjusted for inflation, the index remains about 16 percent below peak.

Home prices have been pushed higher in part by low inventory. Supply of homes for sale varies across the country. In the Washington area, the number of homes on the market in November was at its lowest level in three years.

The combination of higher rates and higher prices may present obstacles for potential homebuyers, as U.S. economic growth has been steady but slow. The housing market is very dependent on the jobs market. People are reluctant to make large purchases such as buying a home unless they have a steady income. Although unemployment is down, wage growth has been stubbornly lackluster. Average hourly earnings declined by 3 cents to $25.89 last month, offsetting the large gains in October.